Eli Lilly - Case Studies
Between 2002 and 2012, Eli Lilly's Cialis managed to surpass Viagra, the dominant erectile dysfunction treatment, in annual revenue thanks to emphasizing the longer effective time window of its product and positioning it as a solution for romantic couples rather than men who want to "fix their problem." In 2004, with fierce competition in the antidepressant category, Eli Lilly positioned Cymbalta as the treatment for both depression and physical pain that is often associated with it. Later, the drug also received indications for diabetic nerve pain, fibromyalgia, and chronic pain, which allowed for further differentiation and reaching new target groups. In the diabetes space, its GLP-1 receptor agonist Trulicity quickly gained the market share on main competitors thanks to its superior qualities, such as once-weekly dosage and efficacy. By analyzing those examples, we can conclude that superior R&D and innovative marketing strategies are the main factors that allowed the company to take their products to dominance.
Please note that as there was no way to get comprehensive information about any Eli Lilly's product from one, non-paywalled case study, I supplemented it with other case studies, reports, and articles in the industry media. As the best examples were older than 24 months, I used older sources that most accurately cover them.
Responding to Pfizer's success with Viagra, major pharmaceutical companies started developing their own erectile dysfunction treatments. Before Eli Lilly launched Cialis, Bayer entered the market with Levitra. However, according to Harvard Business Review, it's an example of a "me-too" drug, with the lower price being the only advantage. At the same time, Eli Lilly wasn't convinced if they would be able to maintain their dominance in the antidepressant space with Cymbalta, which pressured them to find new revenue streams.
I chose this case because various reputable sources, such as Harvard Business Review and McKinsey, consider it as an example of effective product and marketing strategy.
According to Financial Times, Cialis was developed with the help of InnoCentive, an online platform where researchers could contribute their ideas and be paid if Eli Lilly used them. This allowed them to cut R&D costs and remain innovative. The strategy was later adopted by several pharma companies. (In case you weren't able to access the article from FT, I also uploaded it as pdf.)
The innovativeness of Cialis, launched in 2002 in joint venture with ICOS, was one of the main factors behind its success. Compared to its competitors, it had the longest effective window time (36 hours). It also had less vision-related side effects. Eli Lilly had to choose whether to market it as safer or more convenient. Despite the fact that physicians prescribed ED treatments based primarily on their efficacy and safety (giving it 70% importance, while the importance of duration was less than 10%), the company opted for the latter. Cialis was also more expensive to emphasize its superiority.
At the same time, according to McKinsey, Eli Lilly invested in deep consumer insights to determine how to position Cialis against Pfizer's product. While Viagra was marketed to men as something that allowed them to treat their sex issues, Cialis was positioned as a solution for romantic couples. According to both McKinsey and Harvard Business Review, it was the strategy that ultimately led to beating Pfizer's Viagra.
The initial investment in marketing was $100mln. Pfizer's promotion spending on Viagra was the same in 1998, when the market wasn't as competitive yet. Therefore, we can conclude that marketing spending wasn't the main factor behind the success.
Cialis was gradually increasing its market share between 2002 and 2011, when it became the same as Viagra's (you can see the chart on page 18 of McKinsey's report). In 2012, Cialis' annual revenue surpassed Viagra's, which then stood at $1.9bln.
In the early 2000s, Eli Lilly was at risk of losing its dominance in the treatment of depression. Prozac, its blockbuster drug in that space, was about to lose patent protection, which meant that competitors would soon release its generic versions. At that time, the anti-depressant category was highly competitive. According to PharmaExec, its marketing spending was "second only to the proton pump inhibitor class for heartburn." Taking all of this into consideration, I decided that the success of Cymbalta, Prozac's succeesor, is one of the best examples of the company launching a product in an established market and building its dominance.
In need of a product that would replace Prozac, Eli Lilly increased their R&D spending by 30%. Furthermore, they created the New Antidepressant Team (NAT), which consisted both of researchers and marketers. It was led by John Kaiser, the global marketing director for Prozac.
After the initial clinical trials, they knew that introducing Cymbalta would be risky, as it had to be taken twice a day to be effective. Competitive products only required one dose each day. They risked their reputation in the antidepressant space. However, they decided to push through with it because they developed it as a treatment for both depression and pain. As the latter was one of the physical symptoms most commonly associated with the former, it allowed Eli Lilly to differentiate their product and position itself as an innovator in the industry.
Additionally, having the product approved and marketing it as the pain treatment allowed the company to enter the pain management category. In the months and years following the launch, Cymbalta received indications for diabetic nerve pain, fibryomalgia, and chronic pain, which increased sales and helped the company reach new target groups.
In 2009, Cymbalta surpassed Prozac's record annual revenue of $2.6bln. Its sales peaked at $5bln in 2013. Eli Lilly maintained its dominance in the anti-depressant space.
After researching the examples of the company's dominant products (identified with industry reports), I didn't find other examples that would perfectly fit the criteria. However, Trulicity is close, as it became one of the dominant players fairly quickly, after entering a highly competitive space. It's a GLP-1 receptor agonist, which treats diabetes. The market was already saturated when Eli Lilly launched Trulicity in 2014. Major players included Novo Nordisk's Victoza and Byetta.
Like with the two other examples, industry media cite the quality of the product as the main reason behind its quick success. Compared to Victoza and Byetta, it's more efficient and convenient, only requiring once-weekly dosing.
Additionally, in the U.S., the company didn't start with marketing Trulicity to physicians and consumers, which is a standard practice. According to them, it wouldn't work in such saturated market. Instead, sales reps focused on payers, particularly those in commercial managed care. Then, the company approached endocrinologists and primary care physicians. The first DTC campaign wasn't launched until a year after FDA approval. It targeted those who needed to move from oral treatments to injectable therapy but were slow to do it, emphasizing how easy using Trulicity is compared to insulin injections.
The 2016 revenue was $700mln. It's one of the main growth drivers for the company. While Victoza is still the major player in this category, Trulicity is quickly gaining the market share, surpassing other key competitors, such as Byetta. As for the U.S. strategy, two-thirds of people on commercial managed care plans are approved for Trulicity.
In conclusion, Cymbalta, Cialis, and Trulicity are three of the Eli Lilly's products that were launched in established markets and became dominant. In all of those cases, superior qualities of the treatments, such as being approved for more than one condition, having the longest effective window compared to competitors, or once-weekly dosing, contributed to the success. Smart marketing strategies, which focus on smart product positioning, are another major factor.